Xilinx Makes A Chip for All Seasons

Henry Norr, Chronicle Staff Writer

Published 4:00 am, Saturday, January 8, 2000

Keeping up with the Joneses may soon get a bit easier, at least when it comes to making sure your cell phone, TV and other consumer electronics devices can do all the latest tricks -- without making you trade up for a new model.

That's the promise of a new family of "future-proof" chips that semiconductor vendor Xilinx plans to unveil on Monday. The chips, which will cost as little as $10 apiece in volume, will allow manufacturers of next-generation digital devices to add new features, as well as fix bugs, simply by offering software updates for users to download over the Internet.

Though hardly a household name, even in its home region, Xilinx has lately been attracting plenty of attention from Wall Street. Over the past year, its stock price has more than doubled, giving it a market capitalization of about $14.5 billion -- second only to Intel among Silicon Valley semiconductor companies. At one point during the past week's Nasdaq sell-off, the company had lost more than 10 percent of that value, but by week's end, it had regained most of the loss.

In October, Merrill Lynch put Xilinx on its "Top 10 Tech" list, replacing Intel. And the next month, Standard & Poor added the company to its S&P 500 index, though that move generated only a fraction of the publicity Yahoo gained when it was added to the S&P list a few weeks later.

This year, which for Xilinx ends March 30, the company's revenues are expected to approach $1 billion -- an increase of nearly 50 percent over last year. About 70 percent of that comes from networking and communications customers, including Cisco, Nortel, Lucent and just about every other major provider of Internet plumbing.

Most Xilinx products are of a class called field programmable gate arrays (FPGAs) -- chips whose internal structure, and thus what they do with data, can be modified at any time. Xilinx invented the category, and it still claims 50 to 60 percent of the market for them.

Until now, though, FPGAs have been so expensive, according to Xilinx CEO Wim Roelandts, that they've mainly gone into high-price, low-volume products, including mainframe storage devices, medical electronics and industrial robots as well as networking equipment,

But the new chips, called the Spartan-II family, will allow Xilinx to address a market that's three times as large as its current one, Roelandts said. They're due to go into full production by the end of this quarter.

The company has actually offered low- cost FPGAs for several years, but until now they've been limited to less than 40,000 "gates" -- the tiny logical switches used to manipulate data inside the chip. The Spartan-II series will incorporate up to 150,000 gates -- well into the "sweet spot" for mass-market products, which according to Roelandts typically require 100,000 to 300,000 gates.

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New digital devices that will incorporate the upgradable Xilinx chips, according to Xilinx spokesman Mike Seither, include DVD players, cell phones, high-definition televisions, audio equipment and cable and digital subscriber line modems. Many of them, he said, were on display at this week's Consumer Electronics Show in Las Vegas, he said, though the only company willing to disclose plans to use the chips was Replay Networks, a Mountain View manufacturer of tapeless TV recorders.

In Nasdaq trading yesterday Xilinx rose $4.63, to $45.44. The company split its stock 2-for-1 in March of last year and again in December.

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